How to Figure out Your Auto Insurance Deductible

As you research auto insurance coverage, you have to measure several different variables. One of the most important variables is your auto insurance deductible. Choosing the right deductible is very important to the overall strength of your policy. This guide will help you make the best decision possible.

Your auto insurance deductible has a direct impact on your monthly premiums. You are searching for an affordable deductible that will keep your premiums from rising. Before choosing a deductible, you also have to look at how it may change based on whether you have comprehensive or collision coverage.

What Are Deductibles

Deductibles are the monetary amount you are willing to provide alongside your insurance company if you suffer a loss. You’ll be required to pay that amount out of pocket before the insurer covers the rest of the damage. When you are comfortable paying a higher deductible, you take on more risk. By taking on more risk, you significantly reduce the amount of premiums that you pay every month. Deductibles vary by state, but common deductibles are between $500 and $1,000. You are required to pay your deductible every time that you file a claim. If you file multiple claims during the year, you have to cover your deductible each time.

Comprehensive and Collision Deductibles

Comprehensive auto insurance covers any damage to your vehicle that was not caused by a collision. You are covered if your vehicle is stolen, vandalized, or damaged due to an accidental fire or inclement weather. If your vehicle suffers severe damage while in motion, you can file a collision insurance claim. If your car is totaled, your insurance company will reimburse you based on the value of your vehicle minus your deductible so that you can find a replacement.

If you financed your vehicle, your insurance company will reimburse your loan provider. You can use the difference between your loan balance and the funds from your insurer to find a replacement vehicle. Be aware that comprehensive coverage isn’t mandated by law. However, it is a likely requirement if you are financing a vehicle. Comprehensive insurance is an asset because it reduces the amount you’ll have to cover out of pocket if an unexpected disaster happens.

Choosing a Deductible

To avoid overcomplicating things, many drivers choose the same deductible for comprehensive and collision insurance. Research shows that comprehensive claims are generally lower than collision claims. Therefore, insurers typically charge less for comprehensive coverage.

Assess Your Budget

Figure out your budget before choosing a deductible. You should have enough money on hand to cover your deductible in the event of an emergency. Accidents can happen at any time, which means you never know when you will have to make a claim.

Learn About Your Coverage

While you continue gathering research, remember that the purpose of insurance is to prevent you from suffering a financial catastrophe. Consider covering small losses out of pocket. However, you still need to notify the insurance company about the damage even if you aren’t filing a claim. Be aware that some auto policies include deductibles for minor damage such as a cracked windshield or mirror.

Assess Your Vehicle’s Value

Assess the cost to repair or replace your vehicle. You should gauge the amount of comprehensive coverage you need and which deductible level aligns with your financial situation. Older vehicles are generally cheaper to insure. Having a lower deductible will not impact your finances. If your vehicle has a low replacement value, you may not need collision or comprehensive coverage. Assess whether you would want to use your savings to cover damage to your old vehicle.

Consult with Reardon Agency Insurance

Finding the right deductible for your auto insurance policy can be complex. The key is to find a policy that aligns with your needs and budget. If you need assistance searching for the right deductible, the experts here at The Reardon Agency will assist you.

Comments are closed.

Call Us Get a Quote